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tv   Nightly Business Report  PBS  March 3, 2011 1:00am-1:30am EST

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captioning sponsored by wpbt >> we've been working on this a long time, and i wouldn't want to miss this. >> susie: and with that, steve jobs was back. the apple c.e.o. takes a break from medical leave to unveil the ipad 2. >> tom: it's twice as fast as its predecessor and expected to lead the year of the tablet computer. you're watching "nightly business report" for wednesday, march 2. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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this program is made possible by contributions to your pbs station from viewers like you. thank you. >> tom: good evening, and thanks for joining us. saying he wouldn't want to miss it, apple c.e.o. steve jobs was on stage in san francisco today, susie, where he introduced the new ipad 2. >> susie: tom, seeing jobs was a huge surprise, and he got a standing ovation. and then here on wall street, investors applauded the news; apple shares jumped nearly 2% in intra-day trading. apple fans and investors were happy to see a thin but energetic steve jobs. it was the c.e.o.'s first public appearance since taking medical leave in january. he called the ipad 2 "magical," saying the tablet is a thinner, lighter, faster powerhouse. it goes on sale march 11, and the new version starts at the
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same price as the original: $499. it also comes with both front and back cameras so you can shoot pictures and video. >> tom: apple's newest device enters a more crowded market than the original ipad, but "consumer reports" technology editor jeff fox says the ipad 2 has a huge head start on its android-based rivals. >> there's a lot more apps coming out now for the ipad. it has taken developers many months to produce these things. it's going to take a year or two for the android market to ramp up and really start to seriously compete with it. >> tom: it is already responsible for a big chunk of apple sales, 17% in the picture. >> apple ipad 1, it sold close to about 15 million in nine months. and i think ipad 2 has the
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potential to at least do 30% to 40% better than what ipad 1 did. >> tom: that would mean ipad 2 could sell 20 million units before the end of this year. but chowdhry says one challenge this ipad has that the earlier version didn't is higher gas prices. he's worried that might nix some consumer spending. consumers cob in for a surprise if they're planing on buying a home, a much bigger down payment. regulators are planning to require a 20% down payment for a mortgage to qualify as low-risk, and that could have important consequences, as darren gersh reports. >> reporter: the national association of realtors says fewer than one-in-five first- time home buyers now comes up with a 20% down payment. if regulators raise the down payment required for a loan to be considered a low-risk mortgage, the realtors' paul
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bishop fears new buyers will be pushed out of the market. >> if you want to sell your home, then you need more people to come into the market to buy that home so that you can trade up or trade down yourself. so, to the extent that first- time buyers are shut out of the market, that's going to potentially ripple effects to the rest of the market, as well. >> reporter: regulators want to make sure a massive housing bubble never happens again. under the dodd/frank financial reform law, lenders are responsible for some of the credit risk from the loans they sell to investors. the goal is to make lenders more careful, but lenders would not have to bear that risk for loans that meet certain safety standards. the 20% down payment is one, but there may be others, says consumer advocate julia gordon. >> you have to have full documentation, you have to underwrite for the term of the loan, not just a teaser rate. >> reporter: home buyers who haven't saved up for a big down payment could still get a low down payment loan through the federal housing administration, but gordon says that help will be limited. >> i think everybody agrees right now that the f.h.a. has
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too much market share and that we don't want to create some kind of dual housing market, just one for the haves and one for the have-nots. >> reporter: following the housing bust, lenders have already tightened their lending standards. the mortgage bankers associations steve o'connor fears the new requirements will make it even harder to get a loan. >> we don't want the pendulum to swing too far because that runs the risk of destabilizing the housing sector, which obviously creates risk for the economic recovery. >> reporter: regulators argue the new requirement is actually not that new. before the housing bubble gave birth to all those exotic mortgages, 20% down was fairly standard. darren gersh, "nightly business report," washington. >> tom: here are the stories in tonight's "n.b.r. newswheel." stocks moved higher; the dow rose 9 points, the nasdaq was up 11, and the s&p 500 gained two. big board trading volume tapered off from yesterday's pace to about one billion shares while
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nasdaq volume fell below two billion shares. it was another spike in oil prices. april crude futures surged almost 3% to $102.23 a barrel on new fighting in libya. it's oil's highest close in more than two years. and president obama signed a two-week stop-gap funding measure into law. it keeps the federal government running. he urged republican and democratic lawmakers to negotiate a new budget with his chief of staff and the vice president. still ahead, with oil prices over $100 a barrel, "street critique" guest hilary kramer takes a second look at alternative energy stocks. and how would you like to save 50 grand? tips in tonight's "money file." >> susie: another dose of good news today from the auto world, a day after detroit's big three reported strong february sales. autonation, the country's largest seller of new and used cars, reported a big jump in its numbers. new vehicle sales rose 29% compared to a year ago.
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u.s. brands made up 40% of sales. g.m. models were especially popular. joining us now: autonation's president, michael maroone. hi, mike, nice to have you on the program. >> hi, thanks for having me tonight. >> susie: so you've had two months of back to back strong sales, but as you heard on our report a lot of concerns about higher oil prices, higher gasoline prices getting close to $4 a gallon. could that break the momentum? >> susie, at this point it's not a factor in the purchase decision. we're seeing consumers have really normal spending pat earns, certainly fuel efficiency is a consideration, but it's not the driving factor. now as fuel prices move up or when fuel prices move up, it could be a factor. we call it the freak out point, and that's somewhere north of $4 a gallon. >> susie: so that's when consumers just say that's going to be just too much for me to fill a tank and they back off from coming into the
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showroom? >> no, i think it's actually where they move to different products. and we saw it back in 2008 where there was a radical move from large suv's to smaller cars. i don't think you'll see that kind of radical move today. what we've got is a lot more fuel efficient products from every manufacturer. so i don't think it will stop business. i certainly think it would shift mix. but at this point in time it hasn't been a factor. >> susie: so going into the spring sell season, what kinds of vehicles do you think will be the best sellers? what kind of brands are going to be popular in this current environment? >> well, right now we're seeing a real surge in the domestic products. as you mentioned earlier the domestic sales were up 40% for auto nation, the import sales were up 35%. and in the import category toyota was red hot, up 71%. and on the domestic side all three, ford, g. m. and chrysler all were very strong. in terms of model mix, the crossover segment is still
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very strong, and we're seeing a lot of small fuel efficient vehicles being introduced that are getting lots of attention, including the two electric vehicles, the leaf and the volt. >> susie: and mike, what about any kind of special deals or incentives to entice consumers to buy? >> well, almost every day there's a new incentive. they're used in a very tactical manner. the incentives are are relatively flat with prior periods. but today we saw g. m. announce zero percent financing, up to 72 months on specific models. we're seeing honda increase their incentives, nissan has a very aggressive program. toyota has been aggressive. so almost every manufacturer has something, and it varies tremendously. it's certainly tactically driven and it is still iting business. >> susie: what about on the credit side, for someone that does need financing, is it getting easier to get a loan or is it still pretty tough? >> susie, it's gotten much
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easier. the big driver of the recovery in 2010 was the restoration of credit. the change in 2011 is we're now seeing an improving environment for sub prime. so last year prime and near prime were more normal, and this year we're starting to see the sub prim segment come along and that's very important for our industry. >> susie: all right, interesting information. thank you so much, for coming on the program tonight. >> thank you, susie. >> susie: we've been speaking with mike maroone of autonation.
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>> susie: guess what's picking up steam on wall street in a big way? if you're thinking initial public offerings, or ipos, you're correct. after a few quiet years, u.s. companies are going public again. 2010 was a good year for ipos, but this year is expected to be even better. suzanne pratt takes a look at what's behind the deal activity. >> reporter: from the social- networking site linked-in to telecom innovator skype, many u.s. firms are thinking this is the year to go public. i.p.o. expert kathleen smith says the pickup in deal activity suggests growing confidence in the economy and the stock market. >> investors are moving money from bonds into stocks because interest rates are so low. so they're looking for returns and looking for growth companies, and growth companies are really the domain of the i.p.o. market >> reporter: according to renaissance capital, there have already been 24 u.s. ipos this
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year. that compares to nearly half that amount in the same period last year. b.d.o. capital markets expert brian eccleston says pent-up demand from private equity funds is also a big factor. >> a lot of the private equity money and a lot of the private equity-owned companies that have been waiting on the sidelines the last couple of years may now be recognizing that prime time is here, and we've already seen that with some activity in the first couple of months. >> reporter: toys 'r' us is one of those private equity-owned firms reportedly considering an i.p.o. this year. even though no decision has yet been made, the company may try to raise as much as $800 million. look for the size of i.p.o. deals to grow this year, and for most of the activity to happen in technology, energy, biotech and healthcare. while not all i.p.o.s can be winners for investors, experts are predicting good returns from this year's deals. >> at this point in the i.p.o.
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cycle, we see the better companies in general coming to market at better prices because investors are more selective. in between we have some questionable i.p.o.s, but some of those aren't getting done or they're getting done at very discounted prices. >> reporter: don't expect a discount when hospital giant h.c.a. goes public next week. the company is planning to raise more than $4 billion, making it the largest private-equity i.p.o. ever. suzanne pratt, "nightly business report," new york. >> susie: so tom oil hit $s00 a barrel, stocks still go up, go figure. >> tom: but it was a tempered day today, no doubt about it. a choppy day. it was a choppy day of trading for stocks as oil prices closed above the century mark.
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let's start with oil, closing over $102 a barrel for the first time in more than two years. more fighting in libya fueled growing worries about supply disruptions. weekly inventory reports also showed a surprise drop in u.s. oil supply. no surprise the energy sector was the strongest for stocks with oil. cameron international jumped almost 5% to a new 52-week high. fellow oil services firm than 3%. national oilwell was up more than 3%. offshore driller noble gained 3%. one energy firm not coming along for the rally, today at least: weatherford international. shares fell more than 10% on huge volume. the company disclosed a $500 million tax accounting error. weatherford calls it "embarrassing."
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the technology sector also found buyers today, helped by semiconductor stocks. this semiconductor exchange traded fund added 2% as volume almost tripled. this high was hit two weeks ago. a j.p. morgan analyst upgraded chip stocks, figuring the inventory glut is over. xilinx added almost 6%. chip equipment make k.l.a. tencor was up 3.5%. texas instruments added more than 3%. yahoo also helped out tech, up 3%. it is in talks to sell its 30% take in yahoo japan. discount retailer costco didn't exactly wow investors with its quarterly results today, coming in as expected. international and gasoline sales helped. cowen and company analyst laura champine thinks higher pump prices could continue to help. >> prices around $4 hurts
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costco's margins a little bit, but it also drives traffic to costco. they're happier to take a skinnier margin on gasoline just to drive that traffic. and they don't sell gasoline to non-members, so it helps move their membership numbers higher, too. and that membership fee income stream is really where they make most of their money. >> tom: champine says costco will not raise membership fees this year, as expected, something she calls disappointing. that may explain the stock reaction, down 3% to its lowest price in a month. finally, remember this name: alcatel-lucent. shares jumped 11% to their highest price in 2.5 years. volume jumped five-fold. and that's tonight's "market focus."
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>> tom: the last time oil prices were over $100 a barrel, alternative energy saw lots of interest. we may see it again, according to tonight's "street critique" guest. she's hilary kramer, editor at www.gamechangerstocks.com. good to see you. you like solar energy especially. why solar? >> well, it's all about lower carbon emissions and about being more economical. once the money is spent and the capital expenditure is there, solar is a cheap way to
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go for energy. >> tom: and you're looking at one that services the utility sector, satcom, this was a pick of yours back in november when it was 4.40 a share, it rose to 5.5 before falling off lately, around 3.50. what's the catalyst here trz catalyst is that it was just a revenues says. satcon is growing, they had 238% increase in their most recently reported revenue, but $5 million short on revenue in terms of guidance for the first quarter and you have a company that the market just sold off, wall street doesn't like any guidance to be lowered. so you have an opportunity to get into a solar inverter company that is the lynch pin, the key around large scale solar utility projects, the inverter. >> tom: with the $2 drop we saw from its most recent high dourks still own it? >> yes, yes. matter of fact i bought more because the opportunity is so strong and the growth is here. >> tom: we've got several viewer questions lined up. zoe writes, i purchased
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radnational a few months ago, do you still recommend it? rdnt. it went from 3.30 up to almost 4 and now is down below that purchase price. do you still own it, are you putting new money to work? >> i still own radnet. the key with radnet is that as an imaging company they are buying for pennies on the dollar, their competitors in this sector. and radnet has a scale to be able to negotiate with the insurance companies for more reimbursement dollars. and it's all about scale when it comes to health care, whether it's pharmaceuticals or x rays and cat scans. >> tom: another one from aaron, he e-mailed us at nbr.com writing you recommended hrz, horizon lines, recently it's settled a price fixing case against it and stopped its dividends. do you see any stock price potential left? really taking a move down from almost $6 per share down below
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$4 per share. have you gotten stopped out? >> no, i stick with the small cap. i don't have stops on those. it's high risk, high return, we call it alpha plays. but with a lot of volatility. we're looking for performance, we're looking for doubles, but we take our chances and in this case horizon took a hit with a fine they paid, but they're part of the jones act and have ex clues it for their shipping lanes between the contiguous united states and territories like puerto rico and guam or states like alaska. >> tom: do you still own all the stocks we mentioned tonight, hillary? >> i own them all, yes, tom. >> tom: you can follow all the previous picks on the blog. you can email us, streetcritique@nbr.com; or you can send us a note via twitter at my feed, hudson n.b.r., or n.b.r.'s feed. and facebook, too. we'll feature some of your questions next wednesday. our guest this evening on "street critique," it's hilary kramer with www.gamechangerstocks.com. >> susie: and here's what we're watching for tomorrow. the national football league has until midnight to reach a contract with the players union
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or face a work stoppage. we'll also see quarterly results from anheuser-busch in-bev and chain store sales for february. and speaking of sales, we look at how retailers are bracing for the fallout from rising cotton prices. president obama could soon put "for sale" signs on government properties around the country. he wants an advisory panel to create a list of unneeded federal properties that can be sold to save taxpayer money. uncle sam currently owns more than a million pieces of real estate, at a cost of $20 billion per year. the president says about 14,000 of them are no longer needed, and thousands more are under- utilized. >> tom: ford is recalling 35,000 vehicles in the u.s. and canada over electrical problems and fuel leaks. the fuel leak recall includes 25,000 ranger pickups built between october 2009 and may of last year. more than 9,000 other ford
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vehicles are coming back to fix a software glitch that could lead to an electrical short. that recall includes this model year's edge, f-series pickup trucks and lincoln mkx. >> susie: many people are feeling pain at the pump as gas prices surge higher.
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so if you're looking to ease that pain, tonight's "money file" has some ways to help you save cash now and over the next decade. here's donna rosato, senior editor at "money" magazine. >> in these still tough economic times, who wouldn't want to save an extra $50,000? here are several strategies to get you to that goal over the next two to ten years. first, if you've got kids headed to college, encourage your child to enroll at a state school or community college for the first year or two and then transfer to a private school. the typical private school is $37,000 a year. you can cut the price of a degree by having your child start out at an in-state public college where the average tuition is $16,000 a year, or a community college that's $3,000 a year. another strategy is to focus on one big-ticket expense to reduce or eliminate. for example, if you have a second or third car, getting rid of it will save you $50,000 over five years on fuel, insurance, repairs and taxes, even after adding in commuting costs. or you can trade down to a less expensive, more fuel efficient
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vehicle and save $50,000 over seven years with lower insurance, finance and operating costs. you can also slash your mortgage costs by refinancing a 30-year mortgage to a 15-year or 20-year loan at today's low rates. this makes sense if you can afford the higher payments and have at least 20% equity in your home to get approved for refinancing. all these moves will put a lot more cash in your pocket. i'm donna rosato. >> tom: just a reminder, you catch us online at n.b.r. on www.pbs.org. there you can comment on our blog or watch any programs that you may have missed. or you can follow us on twitter at "biz report" or my personal feed at hudson n.b.r. if tweeting isn't your thing, friend us on facebook at "biz report." finally, if you watched monday night's program, you know we had a guest on who said that historically the first trading day of the month is usually a good time to invest. rick bensignor attributed that trend to people investing their
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paychecks at the beginning of the month, but that certainly wasn't the case yesterday. so, what happened? bensignor says the market zigged when so many were looking for it to zag. in essence, he blames yesterday's 168-point drop on the spike in oil prices. next month, the first trading day is friday, april 1, so, susie, we'll see if the markets get tricked on april fool's day. >> susan: only if you're superstitious. >> tom: that's "nightly business report" for wednesday, march 2. i'm tom hudson. good night, everyone. and goodnight to you, too, susie. >> susie: good night, tom. i'm susie gharib. good night, everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:
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this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> more information about investing is available in "nightly business report's" video "how wall street works". to order this dvd, call 1-800- play-pbs or visit online at shoppbs.org.
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